williams capital picks from alpha seeks

[setliff]

Williams Capital's energy picks: SM, NFX, COG, EGN, GPOR, OAS, PDCE, PXD
Aug 29 2016, 18:25 ET | About: SM Energy Company (SM) | By: Carl Surran, SA News Editor [Contact this editor with comments or a news tip]

Williams Capital believes oil industry fundamentals are solid despite current commodity price levels but is cautious overall and advises investors not to chase the recent run at current valuations.

However, the firm recommends select underappreciated companies with lower expectations and re-rating potential, and thinks companies situated in core resource plays that can demonstrate further capital efficiency improvements with catalysts will continue to garner top valuations and M&A premiums.

Two of Williams' favorites are SM Energy (NYSE:SM), which the firm says remains one of the cheapest names in the sector with a solid balance sheet and assets as well as a conservative management team, and Newfield Exploration (NYSE:NFX), which Williams sees thriving through the current downturn given its strong balance sheet, ample financial liquidity and strong hedge book.

Also initiated with Buy ratings: Cabot Oil & Gas (NYSE:COG), Energen (NYSE:EGN), Gulfport Energy (NASDAQ:GPOR), Oasis Petroleum (NYSE:OAS), PDC Energy (NASDAQ:PDCE), Pioneer Natural Resources (NYSE:PXD).

Driven largely by valuation, Williams assigns Hold ratings on Diamondback Energy (NASDAQ:FANG), Gastar Exploration (NYSEMKT:GST), Laredo Petroleum (NYSE:LPI), Parsley Energy (NYSE:PE), Rice Energy (NYSE:RICE) and Cimarex Energy (NYSE:XEC).

[dan_s]

Nice to see others like my picks. Be careful with OAS as most of the Bakken is sub-economic with oil under $50/bbl. I have not taken a hard look at OAS, so this is just a general comment.

FANG is over my valuation.
PE and XEC still have some upside.

SM and NFX remain two of my top picks. SM is trading at the lowest multiple of cash flow from operations of all the Sweet 16.